Bailout Watch 327: UAW Holds Secret Trump Card
The Detroit News reveals that page 60 of the Loan and Security Agreement between GM and the U.S. Treasury Department commits GM and Chrysler to a Catch-22. “They would be in default of federal short-term loans if the United Auto Workers [UAW] or another union engaged in a strike or work stoppage.” At the same time, the loan agreement requires GM and Chrysler to bring their labor costs in line with the transplants’ (by February 17 no less). So the UAW is carrying the football; they can nuke GM’s call on the public purse simply by striking. “I can’t see that a strike would serve any benefit right now,” analyst Aaron Bragman of IHS Global Insight told the News. “It sounds like maybe some Republican union-busting language got in there, which would not surprise me.” And it sounds to me like Aaron, and perhaps the Treasury Department, got it exactly backwards. Will the UAW strike GM? No, but they could. And when it comes to negotiations, potential power is as real as it gets.
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TTAC, take a deep breath, let the anti-GM venom wear off, and when your vision returns, see that this is actually something in GM's favor. Too bad the bill didn't have some fair-trade laws in it...
As much disrespect as I have for Gettelfinger, I don't see him pulling an Arafat. However, if he does, I suspect the press would mostly balk at nailing him for it.
Unions are anything but sensible. The union I belong to has been offered basically a 10% cut in wages with a corresponding 10% cut in work hours and an additional 10% in layoffs to cut labor by ~20%. They are fighting this proposal and trying to enforce our contract, which expires at the end of this year anyway. The other option is 20% layoffs. Which option do you think the actual employees favor? Getting two extra days off each month in exchange for a 10% reduction in wages, but you actually get to keep your job. Or, losing your job? Even the people who don't fall into that bottom 20% who would lose their jobs mostly are fine with a 10% reduction in wages as long as it comes with a corresponding reduction in hours worked. Does the union care what its members want though?
Yeah having re-read all this you need to re-do the title, "GM holds secret trump card".